Are you Overdoing the DIY Mentality?

If you pay a gardener or housekeeper you are flushing money down the drain! Or at least, that’s what many personal finance blogs will lead you to believe. They love to rant about all the ways you can save money by doing things yourself. Well, I would like to counter that argument and show you why the DIY mentality may actually be costing you more!

How much time do you have?

We live in a much faster paced world than previous generations. It used to be only one parent worked and the other stayed home. Back then, doing everything yourself made sense because quite frankly, people had a lot more free time on their hands!

Today, just to make ends meet, both parents have to bust their butt to bring home the bacon. On top of that there may be a lengthy commute to and from work, which is another hour or two of your day that’s gone. When all is said and done, is it any wonder we’re so stressed and have so little time to do anything?

Doing it yourself vs. paying someone

As an example let’s talk about preparing food, because I always see personal finance bloggers criticizing those who “waste” money on takeout. They act as if it’s that’s Holy Grail of savings and if everyone just prepared all their meals from scratch, it would save them a ton of money. It doesn’t quite work that way and here’s why…

Your Hourly Wage: Whether you get paid hourly, a salary, or are self-employed, it doesn’t really matter… ultimately, each hour of your time is worth a certain amount of money. For example, if you earn a salary of $60,000 and work 40 hours per week, then your hourly rate would work out to be just shy of $29. And after taxes, let’s say that meant you were left with $19 of spending money for every hour you work.

Your Cost of Paying Someone: You can stroll into Subway and buy a foot long for $5 or $6. Obviously since they have an assembly line type system, the amount of time for them to make your sandwich may only be 1 or 2 minutes. But if you had to do it yourself at home and (a) buy all the ingredients, (b) cook the meats and prepare all the vegetables, and (c) assemble the sandwich… How long do you think all that would take you to do?

Even if you prepared multiple sandwiches in advance, my guess would be that your average time spent for each one would be at least 15 minutes when you take all of those factors into account. Based on the above income example, if every 15 minutes of your time is worth $4.75 ($19 ÷ 4) then doesn’t it just make sense to pay Subway the dollar or two premium above their actual costs to make you the sandwich, rather than spending your own time to do it yourself?

The bottom line: if you can pay someone less than you earn, you should

Now some people may try and argue with my Subway example and say “I’m on a salary and will get paid the same regardless, so your logic doesn’t work.” But oh yes it does… because even if you are on a salary, I think your time might be better spent pursuing side business ventures to earn additional money.

For example, my extra time is spent researching credit card deals and writing reviews about them. In the time it would have taken me to prepare a meal from scratch this evening, I was able to write this Southwest Airlines credit card review. Over the lifetime of that review (until the card changes and I have to write a new one) the revenue it will bring in from Chase/Southwest Airlines will almost certainly eclipse the estimated $5 to $7 premium I paid by getting takeout instead of cooking myself.

Now I’m not saying this approach works for everyone and in fact, for the vast majority of my life, I was so poor it made sense for me to do virtually everything myself. But for those in the middle class and above, I do not think they should dismiss paying for a gardener, housekeeper, or takeout food as automatically being a waste of money. The truth of the matter is that if you can be more productive with the time you save by paying someone, then by all means, you should!

About the Author: Mike is the founder of the CreditCardForum.com, a site for reviews and deals. He founded it in 2008, after playing the credit card game for years by floating tens of thousands in medical debt using 0% balance transfers. Thankfully, that debt has finally been paid off!